25 December 2014, Abuja – Beginning from January 1, 2015, individuals and organisations that use electricity for commercial purposes will pay more than they are currently doing, the Nigerian Electricity Regulatory Commission has said.
According to NERC, the approval for an increase in the tariff became necessary following the recent rise in the price of gas as well as the aggregate and technical losses incurred by the power generation and distribution firms.
The Chairman, NERC, Dr. Sam Amadi, told our correspondent in Abuja on Wednesday that the tariff increase would, however, not affect residential customers for the first six months of next year, adding that the new rate was basically a review of the Multi Year Tariff Order.
He said the review factored in the current losses being incurred by the power companies, which were different from what they used to be.
Asked to state specifically if there was going to be an increase in tariffs, Amadi said, “The implication of all these is that normally tariffs will go up. But what NERC has done is to insist that they should not increase the tariffs for R2 (residential) customers for six months.
“So, essentially from day one, the tariffs should go up because that is what the figures will show you. You have increased the cost considering the changes in the components; so, somehow they (power firms) have to find a way to distribute it among their consumers. What is happening now is that because there is no increase for R2 customers, they are going to under-recover and they have accepted it.
“The firms are going to look for money to cover for the R2 customers for the next six months. So, the bottom line is that tariffs should have increased from day one, which is January 1, 2015, for everybody going by the increase in the cost of doing business.
“But because of our commitment to ensure that consumers are not bordered with increased cost, we have frozen the increase for R2 customers for six months. They (power firms) are going to administer the tariffs to other classes of consumers other than residential customers.”
Amadi noted that there had been a long running review of the tariffs before the decision was reached, adding that the MYTO was being reviewed every six months.
He said the recent review was a special one and explained that with the commencement of the MYTO 2.1, the commission would now progressively hold the electricity distribution, transmission and generation companies as well as other market operators to the terms and conditions of their licences.
The NERC chairman further stated that the tariff review was imperative because of the anticipated commencement date of January 1, 2015 for the transition electricity market and the memorandum of understanding between the Central Bank of Nigeria and the Nigerian electricity supply industry.
According to him, all these measures are being put in place to ensure that the new owners will fund their operations and provide improved electricity supply.
Amadi added that with the new development, the existing regime of interim rules whereby the commission governed the market without the full rigours of the MYTO would cease, adding that activities of the market would henceforth be governed by strict contractual obligations.
– The Punch